Online Sales To Set Record, Profits Stay Thin

Web shoppers are expected to spend more money than ever before during the annual 2004 holiday shopping season, but online retailers could face a tough time making much profit. Reuters reports that Forrester Research predicts that while online holiday sales will rise 42% to $12.2 billion this year profitability will be up only slightly from breakeven last year.

Many Internet retailers are offering steep discounts and free shipping as they compete with traditional stores. In addition, they are increasing product offerings. Top online retailer Inc. has extend its deadline for free shipping on orders of $25 or more to be delivered in time for Christmas to December 15.

When it comes to selling toys the competition has become brutal as cutthroat pricing pits websites against retail outlets. Even different divisions of the same company are locked in combat. Wal-Mart, the top U.S. toy seller, is charging a shipping fee of only 97 cents for selected toy products bought online and discounting prices below those found in its stores.

Benefitting small business is the fact that eBay has now become the top place to buy and sell new toys online since buyers can often find new or barely used toys below retail price.

Read the full story of online holiday sales at Reuters.

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